Labour Force

According to Europeon Commission

The labour force or workforce or economically active population, also shortened to active population, includes both employed and unemployed people, but not the economically inactive, such as pre-school children, school children, students and pensioners

The World Bank describes

Total labor force comprises people ages 15 and older who meet the International Labour Organization definition of the economically active population: all people who supply labor for the production of goods and services during a specified period. It includes both the employed and the unemployed. While national practices vary in the treatment of such groups as the armed forces and seasonal or part-time workers, in general the labor force includes the armed forces, the unemployed, and first-time job-seekers, but excludes homemakers and other unpaid caregivers and workers in the informal sector.

Labour Productivity

It is defined at the quantity of goods and services that a worker is able to produce in a particular period of time.

Factors affecting Labour Productivity

  • Skills and qualifications of workers
  • Morale of workers. In a period of industrial unrest and low worker morale, productivity is likely to fall.
  • Use of technology- Firms which use more of technology will experience higher labour productivity.
  • Use of labour intensive methods will result in lower productivity
  • Rules and Regulations: Absence of labour market regulations could lead to high turnover and poor worker morale, which could also diminish labour productivity.
  • Countries with strong labour productivity growth tend to benefit from high rates of growth, strong export demand and low inflation. Increased labour productivity can enable a higher long run trend rate of growth.

Unemployment – Basic terms

Unemployment refers to the number of unemployed people, defined as all people above a particular age, who are not working and who are actively looking for a job.

Underemployment refers to all people above a particular age who have part time jobs when they would prefer to have full time jobs or have jobs that do not make full use of their skills and education.

Unemployment rate= unemployed workers/total labour force

Difficulties involved in measuring unemployment

Measuring unemployment accurately is made difficult because of imperfect knowledge. Not all instances of unemployment are recorded, and some records of unemployment may not be accurate. For example

  • Discouraged workers are people who are willing and able to work, and would gladly accept work, but because they have had no success finding a job they have given up actively seeking employment they are placed in the "not in labor force" category.
  • Part-time workers are people who are willing and able to work full-time (35 to 40 hours per week), but are forced to work less because employers do not need their productive efforts. While they have jobs, and are officially included in the "employed" category
  • Some people collect these transfer payments by fraudulently "neglecting" to inform government officials of their actual employment.
  • The underground economy is comprised of illegal productive activities, such as gambling, the sale of controlled substances, and prostitution. These people might not tell the officials about their profession and may not be included in the employment statistics.